Renewing Home Warranty?

[User]

My home warranty is about to expire. They want $300 or so to renew it. I plan to replace the old oven and add a microwave on my own, so that will be a new set of appliances that would either have their own warranty or I am assuming won't be covered by a home owner's warranty.

The only major thing I have is a heat pump which is original, about 15 years old. I've researched this and the consensus is home owner's warranty's pretty much suck when it comes to getting those items fixed.

Is it worth it, or should I ride it out and replace the heat pump myself? I've had no problems with it this past year, and I doubt the HO warranty will buy me a new one; rather just extend my pain by continuously reparing a broken heat pump (if it breaks) and then eventually cash me out for a minimal amount.

Does this sound about right? Should I renew the waranty or keep the $300?

[Don Phillipson]

1. Any objective decision depends on two things, large numbers and actuarial accuracy. The only actuaries who have looked at this situation are the ones who calculated it would be profitable overall for the company to offer a rewewal for 0.
2. The second aspect is insurance. The point of insurance is that you really do not want to collect it (because you do not want your house to burn down or that your car be stolen) but it is there to soften the blow in case of need. What you want is peace of mind, not quiite the same thing as cashing in after a fire or burglary etc.

[Bob Pietrangelo]

You have reached the lifespan of your Heat Pump, I would save that 3 or 400 bucks towards replacement. You can cut your electric usage from your heat pump in half while replacing it.

[Eric]

Insurance is a scam, they go out of their way to instill the fear of an accident or other calamity in you so you'll buy it but the risk is quite low. Then if you do have a claim, lots of times they get out of paying because you didn't quite fit the conditions of the policy. Finally, once you've had a claim they raise your rates to get the money back. If they cant get it all back that way then they raise everyone's rates till they do. The insurance companies were so successful in this scam that now car insurance (for example) is required. But consider this: if everyone is required to have car insurance, why did the cost of "uninsured motorists" coverage rise? Sure, you could hit a kid tomorrow (God Forbid!) and be sued for a million bucks, but the chances are slim and the only chance of getting a million buck is if you do have insurance. If most people didn't have insurance the average lawsuit amount would be far far less than the million you worry about - after all... you cant get blood out of a turnip. Eric

[User]

All good advice here. Thanks.

I don't plan on renewing.

I'm pretty conservative with the electric use, and gone a lot. My highest bill has been $120 and that was during the winter.

Could I realisticly plan on saving that much? The guy at home depot said it would be about $3,000 for a new Trane system (the outdoor pump and the indoor unit).

I just plan on waiting until it dies.

[Greg O]

Look back at the money you have spent on premiums. Then look at what you have had repaired. My bet is you have spent many times more in premiums than what the insurance has covered. A second bet is that if you had saved to money for yourself that you paid in premiums you could buy a new heat pump with it, and have money left over. Greg

[xrongor]

just because you never needed it, doesnt mean its not a good idea. ive payed much more in car insurance than ive used. i could still hit a kid tomorrow and get sued for a million bucks....

which isnt to say this person should or shouldnt renew the warranty. just that its a matter of risk vs reward and should be analyzed as such. its not so simple to just say i didnt need it in the past therefore i shouldnt get it.

randy

[Jerry G.]

You should carefully read the contract you have for your home warranty before paying it out. With many of these there are clauses, and limitations.

The new appliances of today will not last as long as the older ones. The average lifespan of a new major appliance is probably about 5 to 7 years, from how I can see that they are built. Twenty years ago, they could easily last about 10 to 12 years if taken care of.

When buying new appliances, I always take the factory extended warranty. I've used it on a number of occasions for the stove, microwave, and fridge. It included an in-house visit, which saved me a lot of problems. When considering the high cost of appliances, and the high cost of the service, it is a gamble to take an extended warranty for it.

As for a non factory warranty that is through an insurance company, I would not take that. One reason is that they may have the right (must carefully read the contract) to appoint any contractor that they want to do the service, and if the one that they choose is not very good, you will be stuck with it. These insurance companies must make a lot of extra dollars with these policies. I have seen instances where they find situations where they are not responsible to pay out.

They also know that with many of the new appliances that are computerized, the parts and service are very specialized. These parts go obsolete very fast, and many of the contractors who are making the circuit boards do not stay in business very long. This means that a new appliance would be required. Would the home warranty pay the replacement cost, if the one you have is no longer able to be serviced?

[xrongor]

if you dont think its worth it, dont buy it..

hating the system doesnt seem like the best way to base your decision..

randy

[Joseph Meehan]

Consider this. They are still in business. That means they are making money from those who they sell the insurance policies to (they are not really warranties). That means they are charging more than they are paying out, even after all the advertising and administrative expenses add in.

On the other side, maybe you can't afford to be without just encase that big expense comes up, but many people have found out that the policy does not really cover those expensive problems, unless they happen to occur on the 17th of the a month without R in the name.

[Ralph Mowery]

Read the fine print and see if it will really replace the expensive items. The one I looked at when I bought a house a year ago seemed to have a limit of how much they would actually pay or have some kind of deductable. I would not buy one unless I knew the house had something major wrong with it. Then the inspector would have probably cought that and it would not be covered anyway.

[Phisherman]

[Edwin Pawlowski]

The insurance company is interested in making money, not helping you. I've been a homeowner for 39 years. I've yet to have anything that was serious go wrong that would be covered by the warranty. Based on your rate of $300, I would have paid $11,700 in that time (no adjustments for inflation, just for illustration) That money would be better invested, or better spent on better quality appliances. It surely would cover a new heater, etc.

If something goes wrong, you can be assured they are going to replace your stuff with the lowest priced goods with the lowest priced contractor and you have no say. Your house, maintain control. Invest wisely.

[Eric]

Thats the problem , I HAVE to buy it, i don't have a choice, its mandated by law in some cases and in others its impossible to avoid it. And where do you get the idea that "I hate the system"? You must be an insurance salesman trying to divert the topic... if so then you know as well as I do what a scam it is, ranking right up there with the song and dance you get from car dealer's - they talk a good game but when looked at honestly its complete baloney. Eric

[trader4]

"The new appliances of today will not last as long as the older ones. The average lifespan of a new major appliance is probably about 5 to 7 years, from how I can see that they are built. Twenty years ago, they could easily last about 10 to 12 years if taken care of.

When buying new appliances, I always take the factory extended warranty. I've used it on a number of occasions for the stove, microwave, and fridge. It included an in-house visit, which saved me a lot of problems. When considering the high cost of appliances, and the high cost of the service, it is a gamble to take an extended warranty for it. "

I don't know what appliances you're buying, but all of mine have lasted a lot longer than 5-7 years. All my kitchen appliances are now 16 years old and working fine. Washer/dryer are 7 years old, with no problems at all on any of them. Just replaced a GE disposal unit that was 16 yrs old, only because a pipe had corroded and to fix it, I had to remove the disposal, which broke the connecting mechanism.

IMO, the extended warranties on any appliances, TV's, stereos, etc fall into the same catagory as the home warranty programs. If you save the money you would spend on all these things, it more than covers repairs, eventual replacement, etc. Plus you don't have the experience of finding out that whatever finally goes, they may not fully cover or you have to argue to get it, etc.

[stretch]

AMEN!

I have seen many home warranties & the companies behind them. Even if they pay to replace the heat pump thjey will buy you the lowest price/quality unit they can get from the cheapest contractor they can get. Put the money in a "heat pump" savings account. We always name our savings account for the next big expense we expect - as a goal. Hopefully there is enough money in it when whatever we are saving for breaks.

Then get a good - high middle heat pump from a good contractor with a written bid and a written warranty.

Life span of a good heat pump in my area is 12 to 15 years. I live in Myrtle Beach, SC. 70 miles inland from here average life of a heat pump is 5n years longer.

Stretch

[stretch]

If you buy cheap appliances, they will fail sooner than if you buy good ones. A heat pump is the same way, except the installation is as important as the unit. A good unit poorly installed will not work well or last as long as it should.

Stretch